Choco owns 70% of Cake. On 1/1/2015, Cake issued $800,000 10 years bond at 6%. Cake issued the bond at $724,000, with effective interest of 7%. On 1/1/2016, Choco purchased all of Cakes bond for $886,000 with effective interest at 5% and Cakes bond has been effectively retired.

What is the book value of Cakes bond as of 12/31/2015?

	Cash interest	Effective interest	Amortization of bond discount

Calculate the amount of gain or loss from this transaction to be recognized in consolidated statements on 12/31/2015.

Make a journal entry that Cake will record regarding the bond interest expense on 12/31/2016.

Make a journal entry that Choco will record regarding the 1/1/2016 investment on bond, and bond interest expense on 12/31/2016.